Li Ka-shing's son Richard makes a few embarrassing mistakes but is no poorer for it.

Seventeen years ago Li Ka-shing's younger son, Richard, broke away from the family business to start Star TV with $125 million in seed money from his father. The investment paid off when Richard sold Star for $950 million and earned his own spot on the billionaires list. But as a recent botched deal made evident, Richard can't escape his father's shadow. Nor, it seems, can his father escape Richard's blunders.

Last year the younger Li set off a cascade of competing deals to sell PCCW, the Hong Kong telephone company he bought seven years ago with grand visions of becoming the broadband king of Asia. But Li was ready for a change and in August, after months of negotiations, bought 50% of one of Hong Kong's most respected broadsheets, the Economic Journal. He had already stepped down as PCCW's chief executive in 2002, and he sold a 20% stake to China Netcom, a state-run telecom, two years ago. Still chairman, he started shopping the company to private equity firms. Li, 40, who declined to be interviewed for this article, struck a deal with Texas Pacific Group to take private a holding company that controls 23% of PCCW. Australia's Macquarie Bank made its own offer to buy most of PCCW's assets and TPG countered. But Li failed to win the approval of China Netcom, the biggest shareholder after himself, on either deal. The offers alarmed Beijing, which didn't want to see Hong Kong's main telecom sold to foreigners.

Things got more interesting when Francis Leung, then Citibank's head of investment banking for Asia and banker to Richard's father, stepped into the fray. Leung quit his Citi post and brokered a face-saving deal to buy most of Li's stake in PCCW at a rich premium. Where would Leung get the money? A November stock exchange filing revealed that Richard's father, through his charitable foundation, would finance part of the deal. The news caused an uproar. Richard himself wrote a letter to the Hong Kong legislature railing against his father's interference. "Had I known of Mr. Li Ka-shing's involvement, I would have at the very least removed myself from the negotiations," he wrote. Stock exchange authorities barred Richard from voting his shares. Minority shareholders voted the offer down on Nov. 30.

Li, who is stuck with his holding for now, says he is just as devoted as ever to PCCW's future. But shareholders who have seen the stock fall 96% since its 2000 high are not so sanguine. He is also being questioned by regulators for a possible violation of media ownership laws, since he now owns stakes in both a newspaper and a pay TV service, part of PCCW. The company's lawyers say there is no breach of cross-ownership regulations. Last month Netcom pulled out of a joint broadband venture in China with PCCW, raising speculation that all was not well between Li and his mainland shareholders. (PCCW says everything is fine.)

The younger Li's cavalier handling of PCCW has earned him scorn. "He has pulled the pin out of a hand grenade in a crowded room and walked out," Simon Murray told the South China Morning Post
(other-otc:
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). Murray worked closely with Li Ka-shing for years as managing director of Hutchison Whampoa
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) and is now Asia chairman of corporate finance at Macquarie.

Richard Li is no stranger to controversy. Several years ago it was revealed that he had never received a degree from Stanford University, contrary to what regulatory filings and hundreds of published news articles claimed. Li blamed his staff. Angry shareholders launched the now defunct richardliar.com and filed a class action, claiming they had been duped by a Stanford dropout.

None of this has put a dent in Li's wealth: His net worth is up $200 million to $1.3 billion over the past year, thanks to a property bet Li made in 1997. And he may have found a buyer for his Hong Kong insurance company, which is up 40% in value in the last year to $543 million.

Despite the controversy he carries weight in Hong Kong, where he sits on a nominating committee to elect the next chief executive. One of Asia's most eligible bachelors, he is chased around Hong Kong like a rock star by paparazzi and business press. People who know him say they are left wondering: Is he a genius or a lunatic?

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